December 29, 2010

As an open innovation researcher, I sometimes get invited to lecture at high-tech (or low-tech) companies on how the principles of open innovation can be used to improve the efficiency and efficacy of innovation. This draws both on my own published research and the reporting I do for the Open Innovation Blog.

Earlier this month I spoke at a one-day seminar on open innovation in solar manufacturing, held at the gorgeous Fairmont Hotel at the top of Nob Hill in San Francisco. Our hosts were Festo AG, a German process automation company that sells key technologies to PV manufacturing lines (among many others). Since Festo has issued a press release and other outlets have mentioned my role, I thought I’d comment on the event.

The Festo Engineering Network (fen.festo.com) is a free online community intended to spur idea generation and sharing among Festo’s direct customers — those that make solar manufacturing equipment — and its indirect customers (PV manufacturers themselves).

One of the ways that they’re doing this by issuing challenges — in other words, crowdsourcing. They also hope to create a sense of community by attracting the right people and have them network and share ideas.

My opening talk on open innovation was fun because I tried to do it Larry Lessig style. (When you are an academic standing between a room full of industry people and their dinner, use all means possible to engage them.) The slides are posted on FEN but I don’t know that they’ll mean much without the audio.

The real value for attendees came from the expert participants from the solar industry. I understood my role as an academic — to stimulate discussion and to get people to think beyond their current way of doing things.

Like any community, building up the FEN will take time. I believe Festo is pointed in the right direction, but we’ll see how quickly it goes.

December 16, 2010

On Wednesday, Intuit announced a new crowdsourcing initiative it calls “Intuit Collaboratory.” (For non-US readers, Intuit of Mountain View, Calif. is the primary maker of personal finance and small business accounting software here, and also one of the major vendors of personal tax software.)

The initial emphasis of the collaboratory is a crowdsourcing initiative with a $10k maximum prize. The two initial challenges focus on paperless accounting records and receipts. The effort is being led by Jan Bosch, who has been with Intuit since 2007 but was recently appointed vice president of open innovation (so recently, his LinkedIn profile hasn’t been updated.)

In general, the approach is similar to that of other organizations using innovation contests to obtain external innovations, including P&G, NASA, or Netflix. The initial problems and the prize money suggest that this is more of a trial ballon for Intuit — as opposed to Netflix which paid $1 million to improve its core business.

Still, Intuit’s initiative implies that other Silicon Valley firms will also be following suit. With its Intuit Developer Network, Intuit had followed a more conventional platform-based ecosystem model — attracting third party developers first with its SDK and more recently with add-ons to its Software-as-a-Service. (Apparently if you let others extend your SaaS, according to the latest buzzwords it becomes PaaS: Platform as a Service).

The press release emphasizes Intuit’s interest in collaboration, open innovation, and crowdsourcing solutions to specific challenges. (As I’ve predicted in the past, they’re cutting out intermediaries and creating their own market from scratch.)

I’m not quite sure if the new open innovation interest is meant to complement or eventually replace the platform approach. Again, this is an issue of broader interest across Silicon Valley, and thus one I’ll update in the future as I have more information.

December 2, 2010

With the new OpenInnovation.net website, both Henry and I decided to build an academic steering committee for the “Researchers” section. The goal of creating such a committee is both to do a better job of updating the existing content and to add new content.

In addition, rather than being the opinion of one researcher (as it was for the first half-decade of this website), the academic content will be curated following policies set by a group of scholars. In other words, we would use more of an open science process to collect and disseminate scientific research on open innovation.

The content we anticipate providing would include:

Teaching materials, including cases

Conferences

Summary of new research

A bibliography of published OI research

One of the thorny issues we face is coming up with a clear definition of what is “open innovation”? If we are going to offer a comprehensive catalog of "open innovation” research and teaching materials, we need a clear (and easy to operationalize) definition that allows us to consistently decide what is or is not appropriate.

This was an issue I faced several times sinceI started the original website in 2005. It came up when deciding what to include in my old, ad hoc bibliography of published open innovation research, particularly when people sent me a paper and said “here, please list this.”

It’s also something that many of us wrestle with when doing a literature review or overview of the subject. For the website, we want to have a relatively broad definition — but at the same time one that remains consonant with the work of Chesbrough and others in this tradition.

Personally, I think the definition should be a little tighter for theoretical work — something either or is not “open innovation” — than for teaching cases that might illustrate points related to the use of inbound or outbound OI. For example, I find that user innovation cases can often be used to illustrate OI points, and to change the students’ orientation to look outside the firm. Another teaching example would be to look at IP licensing business models, which certainly existed prior to Henry’s 2003 book, but nonetheless can be used to illustrate the principles of open innovation.

We expect to have more to announce early next year. In the meantime, we would appreciate any suggestions from our academic readers as to content or other useful features we should add to the website.

Normally the conference is held in June (when in Europe) or in August (prior to the Academy of Management) when in Boston. I’ll be curious to hear whether the July 4 date will be a positive or negative for American participation.

November 17, 2010

Reprising my appearance last year, on Aug. 31 I presented my talk at Henry Chesbrough‘s Open Innovation Speaker Series in UC Berkeley. The audience was mostly engineering graduate students, with the largest proportion apparently chemical engineers.

My talk provide an overview of O/U/CI and thus was titled “An Overview of Distributed Perspectives on Innovation.” It was an updated version of my May talk in Göttingen, which in turn was an update of my September 2009 talk at COI. Part of this is that the goals were very similar: give an overview of OI and related theories in 45 minutes.

For the first day of class, I think the value was in contrasting OI/UI/CI research, and then emphasizing the importance of topics like crowdsourcing and OI-by-acquisition (aka OI-becoming-VI). I spent a particularly long time on communities, because I think OI has (mostly) neglected studying communities to a degree that UI certainly has not.

For open innovation scholars, the most interesting part is the latest incarnation of my (2010 AOM) paper with Marcel Bogers on innovation modes. We made good progress during our time at Montreal, and I think are getting closer to having something that will make a publishable contribution (rather than just an interesting typology).

The presentation is now up on YouTube. If you watch the video, it’s obvious I had time problems at the end. One reasons was Chesbrough gave a substantive introduction to OI rather than (as I had assumed) just discussing the administrative policies. But the main reason was that my watch — synchronized to global time standards via my laptop — was five minutes behind the classroom clock, something I didn’t notice until near the end. It’s easy to make up 5 minutes when you have 30 minutes left, but not when you have 5 minutes left.

My other failing was that when I was asked about (effectively) corporate venture capital, I couldn’t remember the name of Markku Maula, lead author of Chapter 12 of our 2006 book. It has nothing to do with the quality of his work on CVC and everything to do with not seeing Markku more than once every few years. (Another problem is that he’s the only Markku or Maula that I know.)

My gratitude to Henry Chesbrough and Solomon Darwin for inviting me to kick off the program. It’s great to have a room full of people interested in open innovation, as was demonstrated by the lively discussion afterwards.

Note: I held the article awaiting the YouTube video, but due to technical difficulties the no video was made. My Sept. 2009 COI talk is on YouTube, and Solomon and I plan to double-check the A/V technicalities before my next COI talk on Jan. 24.

November 10, 2010

This week we launch the second phase of the OpenInnovation.net website, which is now called the “Open Innovation Community.”

The goals of the upgraded website are threefold

To go beyond the existing academic audience to also reach a managerial audience

To have an up-to-date source for information about all aspects of open innovation

To attract participation from a broad range of open innovation experts and interested parties

The change comes out of a series of conversations I had with Henry Chesbrough over the past three months. The timing was motivated by Henry’s desire to create a new website to promote his new book, Open Services Innovation.

More broadly, Henry (and Wim Vanhaverbecke and I and many others) are concerned a bout making sure that the concept of “open innovation” is used accurately. On the one hand, some of the claims made for open innovation are (in my opinion) overly expansive, stretching the original insights of Open Innovation beyond recognition. A theory of everything quickly becomes a theory of nothing

On the other hand, there are self-proclaimed open innovation “experts” that don’t seem to have read any of the prior research, including Chesbrough’s 2003 and 2006books and the Chesbrough/Vanhaverbecke/West edited volume. (If you deliberately avoiding learning what’s already known about a subject, how can you be an “expert”?)

So the hope is that over the next few months and years, OpenInnovation.net and the Open Innovation Community will become a more collaborative venue for reporting, writing and discussing about open innovation. If people have news tips, they can be submitted via the contact page (I think we will eventually set up an email address as well.)

While the new website will have a broader focus, most of the existing content has been retained under the “Researchers” menu of the main site. I will continue to edit this blog going forward, at the same address, although other blogs might also be added to the website at some point in the future.

As part of the shift, I have transferred to Henry control of the domain name that I created back in 2005 to promote our book. He has invested significant resources in a professional marketing communications firm to develop the new website that was launched on Monday. (Most of the previous content transferred over, but there will be some teething pains: let me know if you spot anything.)

While Henry created what we now know as “open innovation” concept, his concept for the new OpenInnovation.net is his is not the only voice or perspective represented therein. Instead, as the outgoing owner of OpenInnovation.net, I nominated him as Benevolent Dictator for Life of the new site — much like Linus Torvalids, Guido van Rossum or Larry Wall — and he cheerfully embraced that model. As the BDFL, he retains the master key, but wants to encourage a thriving community of external participants.

Henry and I have discussed specifics about the academic community that we would like to create, and the sort of new leaders that will be necessary to make that happen. More on this in the next post.

October 16, 2010

NASA has been using prizes to attract external sources of innovation for several years. Not only is it helping attract innovative ideas for manned space flight, but it’s also providing a treasure trove of research information on crowdsourcing for researchers like Karim Lakhani, as this NASA press release Wednesday spelled out:

WASHINGTON -- NASA and Harvard University have established the NASA Tournament Lab (NTL), which will enable software developers to compete with each other to create the best computer code for NASA systems.
…
The lab will be housed at Harvard's Institute for Quantitative Social Science under the direction of Principal Investigator and Harvard Business School Professor Karim R. Lakhani, a leading scholar on distributed innovation and crowdsourcing. London Business School Professor Kevin Boudreau, an expert on platform-based competition, will be the chief economist of the NTL.

Under the NTL initiative, Lakhani and Boudreau also will conduct basic empirical research on the appropriate contest design parameters that yield the most effective solutions in a tournament setting. This will enable the routine use of innovation tournaments as a problem solving approach within NASA and the rest of the public sector. Harvard will collaborate with TopCoder Inc., a company that administers contests in software architecture and development, to manage and conduct the tournaments.

Lakhani and Boudreau have previously worked with challenge implementation companies to launch three experimental competitions using problems from the Harvard Medical School's Clinical and Translational Science Center and NASA's division of Space Life Sciences. Results from the experiments demonstrated the ability to deliver high performing solutions and extend the concept of innovation tournaments to scientific and engineering contexts.

At times during its 50 year existence, NASA was one of the most innovative places in the Federal government (next to DARPA and the NSA). Now that it’s shifting away from running a LEO bus service back to interplanetary exploration, it seems to be recovering its interest in innovation and new ideas.

Wouldn’t it be nice if this approach could be more widely adopted by the government? In a limited way, it is. PatentlyO blogger Dennis Crouch notes that the administration’s CTO last month unveiled a website with 35 challenges and prizes, including:

Create nutritious food that kids like — $12,000 prize.

Reducing waste at college football games — school prestige award.

Best original research paper as judged by the Defense Technical Information Center.

Provide a whitepaper on how to improve reverse osmosis membranes — up to $100,000.

Digital Forensics Challenge

Federal Virtual Worlds Challenge (Create the best virtual world for the US Army) — $25,000 in prizes.

Advance the field of wireless power transmission — $1.1M for a team that can wirelessly drive a mechanical climber to 1 kilometer height at a speed of at least 5 meters/sec.

Strong Tether Challenge — create a material with 50% more tensile strength than anything on the market for $2 million.

The problem is that the challenges — and the site’s mission itself — seem more oriented towards PR victories than solving real problems.

The Challenge.gov website proclaims itself “a place where the public and government can solve problems together,” which is just silly PR spin. A better title would have been “an admission that government doesn’t have all the answers and needs better ideas from an involved citizenry.”

I mean if an innovative company like IBM or Intel or even Apple relies on open innovation to generate new innovative ideas, certainly one of† the largest, most bureaucratic and unresponsive organizations in the world should do so. (And I say this as an employee of one of the most dysfunctional bureaucracies in the developed world — the state of California.)

We’re Number #3! We’re Number #3! As best I can tell, there are 2.7 million Federal civilian employees, vs. 3.9 million in India. I can’t find the comparable number for China, but would assume that it’s comparable to India.

Participatory Innovation gathers theories and methods across academic fields that describe how people outside an organisation can contribute to its innovation. Join this conference to help identify ways for industry and the public sector to expand innovation through the participation of users, employees, suppliers, customers etc. – both on a strategic level, in concrete methods, and in the day-to-day interactions.

Editorial comment: I don’t know how “participatory innovation” is different from OI, UI, CI, O/U/CI, distributed innovation or even “open and distributed innovation.” However, they didn’t ask me for advice before picking the conference title.

The title of his talk was “Open Services Innovation,” from his book of the same name that is forthcoming in January 2011 from Jossey-Bass. This is the most full I've seen the auditorium, with more than 150 people present for the free talk.

The talk marked his triumphal return to PARC, which formed the basis of so much of his work of the past decade (that in turn led to his seminal 2003 open innovation book). He noted the records of the Xerox spinoffs and licensing deals (used in these papers and this book) are now in the PARC corporate library, headed by Katherine Jarvis who was there at the talk.

He also apologized for not broadcasting the talk on YouTube. Being cognizant that the Internet never forgets, he worried about having this early talk live on in perpetuity. Apparently the Aug. 26 talk was his first public discussion of the forthcoming book: “like many experiments, there are going to be some failures.”

It’s hard to summarize an entire book in an hourlong talk, and I was handicapped by having to leave early to make it home to provide childcare coverage. However, I think OI blog readers would be interested in a few of the core ideas of the book.

He paraphrased (but formally acknowledged) the definition of Hill (1977: 318) for services:

A service may be defined as a change in the condition of a person, or of a good belonging to some economic unit, which is brought about as the result of the activity of some other economic unit, with the prior agreement of the former person or economic unit.

He talked about the growth of the services economy, using standard statistics offered by services experts. (I haven’t had a chance to talk to him as to whether these statistics make the common mistake of conflating information goods with actual services, but this is explicitly rejected by Hill, who emphasized: “Although services are often dismissed as immaterial goods, they are not special kinds of goods and belong in a quite different logical category from goods.”)

In many way, Chesbrough argues that researchers have been led astray in how they think about services by the “value chain” concept introduced by Porter (1985: 37). In the famous Porter diagram, services are ancillary to the value creation process, which focuses on the transformation of inputs into outputs across a supply chain.

Instead, Chesbrough argued for a more customer-focused perspective: services are the efforts of the firm to more precisely meet the needs of customers, rather than [to use my terms] peddle mass-market common products to everyone. Or, he noted, as Ted Levitt used to say: “People don't want to buy a quarter-inch drill. They want a quarter-inch hole!” Chesbrough’s conclusion: the way to be this customer-centric is to create a feedback loop that incorporates the customer into the services creation process.

I’m not a services guy — in part because my work tends to focus on mass-produced information goods which the services people (as noted above) mistakenly claim as their turf. However, to me this emphasis on the role of services and co-creation seems a more fundamental insight into the business of services, beyond just the application of open innovation to services.

Like Hill, Chesbrough’s conception of services starts with Adam Smith. In fact, the core idea of the talk seemed to be the linkage of Adam Smith to Nobelists Oliver Williamson and George Stigler to innovation in services. These three theories were linked in virtuous positive feedback cycle that reinforces a successful services strategy:

More specialization of labor reduces transaction costs.

Lower transaction costs grows the market.

Larger markets enable more division of labor.

He presented examples of the automobile being transformed from a product to a higher-utilization, more capital-efficient services via the taxi, local rental car, or ZipCar®. Other examples looked at UPS Transportation Management and the Amazon Marketplace.

The point of these last examples is that if firms ask outsiders to provide these missing parts of the value proposition, that’s an example of an open innovation strategy. I wasn’t able to stay for the whole talk due to family commitments; if I had time to stay, I would have asked how the insights of open innovation (or the new book) help firms understand how to use these outside sources of innovation more effectively than (say) the existing platform literature.

Still, this seems to be (sight unseen) the most significant departure by Chesbrough since his original 2003 book. The two books in between are, in some ways, extensions of the 2003 book: Open Business Models is a translation of the 2003 book for non-R&D managers while our 2006 book adapts it (and extends it with outside perspectives) in a form more relevant to academics. Open Services Innovation plants the OI flag on a new and sizable hill.

However, before I spoke, the students (mostly M.S. students from engineering) got a 15 minute introduction to open innovation from the founder/oracle/sage of open innovation himself, Hank Chesbrough.

I don’t have the slides in front of me, but let me share the big picture for anyone who has to teach this to a class.

What is “open innovation”? Chesbrough used his 2006 definition from our book:

Open innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively.

Noting the linkage of open innovation back to practice, he said "This is a way of thinking that emerged from observing what companies do in their practices."

The idea of spillovers predates open innovation, but in the past it was an afterthought, ignored or neglected — treated as an unintended byproduct. "In the world of open innovation, we argue that you can harness these flows and you can begin to direct the: you can direct them to you, and you can direct your flows to (specific) others outside." There are two main modes of open innovation: the inside out and the outside in.

Chesbrough summarized some of the findings from his Xerox field studies that led to his various papers and several chapters of the 2003 book. For example, he showed a number of interesting graphs from the various studies, including the Xerox “CIC/XNE Project funnel”

which looks a lot like Chesbrough’s open innovation funnel (Figure 1.3 of the 2006 book).

In the Xerox diagram, it allowed for three outcomes for internal innovations:

Commercialization via a business group willing to pay for it

Assignment to an internal “new enterprises” incubator

Licensing or spinout of the technology to external companies

Still, the Xerox strategy was more worried about false positives than false negatives. He noted that at one point, the aggregate market cap of 10 Xerox PARC spinouts (including 3Com, Adobe, Documentum) was more than twice that of Xerox.

He also showed a metaphor I hadn’t seen, the “holey” (not holy) funnel, where the holes represent the permeability of the boundaries of the firm. I didn’t catch the name of the author, but it was a new perspective, also capturing the need of a firm focus to focus on multiple “targets.”

At the end, Chesbrough listed some Frequently Asked Questions. Below are his answers [and mine, when I didn’t have a chance to capture his]:

August 30, 2010

Tuesday marks the first installment of the Open Innovation Speaker Series at the Center for Open Innovation at UC Berkeley, effectively the “mother church” of open innovation studies.

The series is every Tuesday from 12:30-2:00 p.m. in 250 Sutardja Dai Hall. Coincidentally, at that exact same time and place is a course called "Topics in Open Innovation” (ENG 298A.4), taught by Henry Chesbrough and Solomon Darwin of the Center for Open Innovation. (Quite a coincidence! What are the odds?)

Below is the all-start lineup of industry speakers (plus a few academics):

Date

Speaker

Aug. 31

Joel West
Professor, Innovation & Entrepreneurship
San José State University

The format seems similar to last year’s series, down to the meeting room. Previous years’ seminars have been archived on the COI website, and many have slides and YouTube videos — including this video from my visit to the COI a year ago.

August 20, 2010

(Catching up on #OUI2010 blogging after an overload of material from OUI and AOM).

At OUI2010 in Boston, I heard the latest update from Peter Meyer in his writing about collaborative innovation by airplane entrepreneurs in the late 1800s and early 1900s, including the Wright Brothers and Octave Chanute. They were hobbyists, enthusiasts, and frenemies, all seeking to seeking to do better than Daedealus and his son Icarus managed to do centuries earlier.

Thinking about Meyer's research project prompted a thought experiment.

Suppose Teddy Roosevelt had said “Let’s put a man on a sand dune by 1903”? (I pick TR because it’s not something either Cleveland or McKinley would be likely to say). This suggests a few questions:

Would the first manned flight have happened sooner? Would the technology have been more mature? Would it have diffused more rapidly?

Would it have been state funded? How would that have changed the incentives?

Would it have eliminated redundant investment? Would this have eliminated experimentation in different approaches to propulsion and wing design, the sort of variation-selection-retention that Utterback and Nelson-Winter write about during the pre-paradigmatic period of a new technological paradigm?

Maybe this isn’t fair: by 1901, a privately-funded solution was right around the corner, so throwing money at the problem probably wouldn’t have sped things up. A better time to fund the project would have been 1880 or 1890.

But like all whimsical exercises, there is a serious point here: some inventions have such a pent-up demand and interest that it’s not a question of if it will be invented, but who or when. The automobile, telephone, radio, washing machine and personal computer are all devices that were going to be invented sooner or later — it was a question of who and when, not if.

There is no market failure here, no underinvestment, no delayed innovation. Boatloads of capital are needed for risky infrastructure — telegraph lines, railroads, highways — and perhaps for products for which there is no commercial market (three man capsules for lunar orbit).

But at least during an era where tinkerers can invent something on their own — or get capital to do so — we don’t have evidence that government intervention will make things better. Given some of the strategic procurement errors made by military bureaucracies before and after WW I, it’s quite easy to imagine how government funding (and control) would make things worse.

August 18, 2010

Professor Christopher Freeman
Expert on the social and economic consequences of developments in science and technology

Christopher Freeman won international recognition for his innovative work on the social and economic context of science and technology. In 1966 he accepted an invitation from Professor Asa Briggs, then Vice-Chancellor of the University of Sussex, to be the founding director of the Science Policy Research Unit (SPRU) at that university. Under Freeman’s leadership SPRU became one of the foremost groups in the world undertaking studies of how societies can maximise the benefits from science and technology while minimising their harmful effects.

From the outset Freeman recognised the importance of building interdisciplinary research teams to undertake this work and always tried to employ both physical and social scientists to study particular issues. He was committed to studying science and technology policy in a global context, encompassing both industrialised and developing countries. During his tenure as director of SPRU, 1966-80, he considerably expanded the scope of SPRU’s research and introduced masters’ and doctoral programmes in science and technology policy and in technology and innovation management. After standing down as director, he continued to contribute to SPRU’s research and teaching activities, and in 2001 the University of Sussex named a building after him (the “Freeman Centre”). This now acts as an international focus for the activities he started so modestly in 1966.

Freeman was a quiet, effective, inspirational leader, commanding loyalty from his colleagues and the support of many funding agencies. He took a great interest in the research of postgraduate students. Indeed there can be few science and technology policy groups in the world which have not benefited in some way from his inspiration as a mentor, lecturer and teacher.
…Professor Christopher Freeman, science policy guru, was born on September 11, 1921. He died on August 16, 2010, aged 88

August 17, 2010

This new journal will deal both with the problems of research and development policy in industry and with the research policy aspects of governmental science policy.

Whereas research management has received considerable attention in the literature during the past decades, research policy has received much less attention, yet in industrial research nowadays the main problem is not how to manage research, but how to determine its appropriate volume and scope, how to bring it in line with the long-term planning of the company and how to integrate it with other operations,

Increasing social concern with the short and long-term consequences of scientific research and technical innovation has led to a growing need to relate the private decisions of the individual researcher, laboratory or firm to a wider social context in which the full social costs and benefits of an innovation may find expression. This embraces both R & D project and programme evaluation and decision-making in industry, as well as in government and universities.

The social cost/benefit evaluation of research and innovation is one of the most complex problems confronting policy-makers, and several of the papers in this first issue deal with this problem, which will continue to be one of th.e main themes of the Journal.

In government research policy, perhaps the key question is how to determine priorities. A paper by one of the Editors in this first issue is intended to initiate critical debate on this fundamental question.

The experiences of innovating organisations in attempting, planning and implementing various innovations, whether complex or simple, are relatively little known or studied. The literature which deals with these questions and other problems of research and development policy is relatively unstructured and scattered in the journals of many different disciplines. RESEARCH POLICY will attempt to provide a focus for this literature and the policy debate it evokes.

The journal will publish papers relating to industrial R & D, particularly case-studies of innovations and analysis of R & D policy in firms. It is hoped that these will be contributed both by active participants in industrial R & D and its management, and academic observers of the process. One such paper is included in this first issue and we shall feature these studies regularly.

Concerning government policy for research, the journal is intending to include papers both by those involved in “science policy” decisions of various kinds, and by independent analysts and critics. The journal will concentrate on European problems including international European R & D experience. It will deal with methods of choice evaluation and programming as well as the measurement of public preferences and the formal theory of decision-making.

The issues confronting policy-makers, whether in government, industry or universities, involve questions of value as well as questions of fact and theory. Critical debate and clash of opinion on policy is both inevitable and desirable, and the Journal will provide a forum for such debate. However, in order that this may be fruitful, such controversy must be well-informed and based on understanding of the circumstances, needs and interests of the participants. For this reason the Editors are glad to publish the note by Professor Casimir on “Industry and Universities” and welcome further papers and comments on the respective role of industry, government and universities in research and innovation.

The Editors

C. Freeman and T.C. Sinclair,
Science Policy Research Unit,
University of Sussex,
BRIGHTON,
Great Britain

August 16, 2010

Christopher Freeman died this morning, August 16, according to an email I received as a Research Policy reviewer. In a brief note, let me try to capture the debt that we all owe him.

Freeman was the founder and first director of SPRU, which was the central incubator of European innovation researchers from its founding into the mid-90s. For example, Giovanni Dosi got his PhD from the SPRU group in 1983 with the dissertation that became Technical Change and Industrial Transformation.

Freeman was also a co-founder of Research Policy, which spring out of SPRU with its first issue in late 1971. (In response to my request, both Ben Martin and Keld Laursen provided the opening editorial and the editorial board from Vol 1 No 1.)

If that is not enough, Freeman is the author of three editions of the definitive book on industrial R&D: The Economics of Industrial Innovation. As I’ve worked on my OUCI papers, I’ve turned back to it several times to understand what we know about internal corporate R&D that is sometimes overlooked by OI/UI/CI researchers.

I visited SPRU once but never had to chance to meet Freeman, either there or at a conference. Still, several generations of innovation scholars will be indebted to him for his key role in creating our field. May he rest in peace.

August 15, 2010

At our #AOM2010 PDW in Montréal, Herr Doktor Frank Piller gave a talk on a case he researched of Webasto. The talk was both exciting and depressing — and novel and familiar — simultaneously.

The company makes certain optional equipment for major car manufacturers, like sunroofs for Mercedes. Compared to auto suppliers, it has a relatively high R&D intensity: 7.5-9%. I’m guessing that’s because a lot of its stuff has to be exciting or people won’t buy it.

He told a great story of how the company brought in the lead user method and was admired around Germany, winning awards for its innovative approach to innovation. It made money selling open training to other companies. It even got hired by its automaker customers to tell them what their customers wanted.

And then in November 2008, the internal champion was fired and all the OI/UI activities were stopped (A quick Google search finds his name, which Frank didn’t mention). The board and/or management didn’t understand the value of the idea generation and either saw it as a distraction or used the recession as an excuse to get rid of someone who was getting more attention than they were.

Frank tells the story better than I, so I’ll defer to his slide deck for the details of the rise and fall of Webasto’s experiment in openness.

Let me instead try some free association: this to me is completely reminiscent of all the other innovative processes for producing innovation.

As a doctoral student during the 1990s (then in marketing), I hung with the PDMA/JPIM crowd because they were the most innovation-oriented of the marketing academics. I did a self-study on voice of the customer, cross-functional teams, lightweight and heavyweight project managers, and all these other good ideas for improving new product development.

Within an organization, usually such ideas start with a single individual, who learns about the latest and greatest, becomes a passionate champion and drags his/her employer kicking and screaming into the Brave New World. (I have also seen this pattern during my occasional consulting gigs.)

After a long time, if there are demonstrable results — or it gets institutionalized into organizational routines — the champion has protégés and assistants who can carry on if he/she disappears. But during its adolescence — or if a new regime wants to come in and sweep out the old — the innovation is only as permanent as the person pushing it.

So from a broader perspective, the innovation theories are new but the process by which organizations adopt them remains the same.

This seems like a good side bet for a doctoral dissertation: study open innovation practice within multiple firms, but write another paper about how it gets adopted in these firms (or non-adopted or unadopted). This is the ideal dissertation strategy: diversified theoretical perspective from a single data collection exercise.

August 11, 2010

At #AOM2010, crowdsourcing was a surprisingly hot topic on the program. As is usually the case at Academy, the most interesting and useful crowdsourcing ideas were not in a paper session, but a pre-arranged symposium (this one on Monday during the main program.)

In previous posts, I’ve asked whether crowdsourcing is a theory, including most recently a posting from last week’s OUI2010. The consensus at Monday’s panel — or at least from those listening to the presentation — seems to be that crowdsourcing is an umbrella term that subsumes a range of phenomena, which can be studied using multiple theoretical perspectives. Researchers are already well along in trying to disentangle important differences within that umbrella.

The session was organized by Yuqing “Ching” Ren and Natalia Levina, and also had presentations by Linda Wang, Nikolay Archak and Karim Lakhani. (Levina has posted her slides on her website. Update Thursday 8 pm: Ren has also posted her slides.)

Since I’m an OI (or O/U/CI) researcher rather than someone who studies crowdsourcing, let me focus on three aha! moments.

Noting that the term dates to a 2006 article (and later book) by James Howe, Ren identified six archetypes for crowdsourcing processes or organizations that use them:

I might quibble since not all “open source” fits the open content/peer production paradigm — just as not all open source is open innovation — nor is “open source” exactly the same as Wikipedia or other “open content” processes. I suspect the bullet point was not meant to imply this, only that the peer production open source communities fit into a group of similar phenomenon with Wikipedia (which at the 5,000' level is certainly true).

The second point, made by Karim Lakhani, is that firms typically run crowdsourcing in one of two modes.

The first mode is a competition, often winner-take-all, with all the dynamics of winners, losers, incentives, etc. (Anyone on the UI/OI circuit in the past 3 years has heard Karim give a TopCoder talk, and now at least one of these papers is forthcoming.) In this case, you want to smoke out the best idea from a large population, without demotivating participants through long odds of success.

However, the open source and other collaborative modes are fundamentally different, because individuals build upon each other, and rather than accessing the “best” knowledge of the crowd, firms are using the collective (and cumulative) knowledge of the crowd. (In the past I’ve asked if crowdsourcing is open innovation or user innovation — in this case it looks a lot like cumulative innovation).

These are clearly not disjoint, since the latest crowdsourcing fad is allowing competition between ad hoc (or pre-formed) teams. Still, Karim’s right that the dynamics of the two are fundamentally different and should not be conflated.

Finally, Karim (or perhaps Karim and co-author Karim Boudreau) made a really insightful point about how innovation contests are different from many other business optimization problems. The goal of a good contest is not to maximize the mean output quality, but instead that of the extreme value — often 2 or 3 deviations above the mean. You are getting M draws from a population of N, and all you care about is the superstar among that M (or maximizing the chance that above-average members of N become participants.)

This increased conceptual clarity shows that academic research on crowdsourcing is maturing much faster than I’d realized. (I mainly follow crowdsourcing for this blog, since my own empirical research tends to be on B2B open or user innovation).

Every new phenomenon goes through this process, when academics start trying to make sense of the phenomenon, and eventually are able to abstract universals without getting the facts wrong. This is the process we saw with “Internet,” “e-commerce” and “open source” research being replayed all over again. I was living the first one, tried to ignore the second one, but was in the thick of the third.

Today, researchers who ignore the canon of open source research will be suitably chastised (at least at any journal that picks competent reviewers.) Crowdsourcing is a ways from that, but certainly the landscape is changing rapidly and authors need to keep up to date with the latest work.

August 10, 2010

During my discussions at AOM2010, one of the topics that came up is that sometimes the term “open innovation” is conflated with other terms and phenomena.

My view: don’t call it “open innovation” unless you mean it in the Chesbrough (2003, 2006) sense. I say this not as a minor functionary of the "open innovation” dogma, but for the same reason I would tell a Ph.D. student to not use “RBV” or “five forces” or ”social capital” for other purposes than as defined in the mainstream literature. It creates confusion, and suggests confusion in your own mind (not a good thing).

Similarly, not all “open source” is “open innovation.” In Chapter 5 of the 2006 book, the editor of Section II(Chesbrough himself) pushed Scott Gallagher and I to tease out the overlaps and differences between open source and open innovation. I’m certainly glad we did, as it gave me a conceptual clarity that I’ve used ever since — and perhaps with this blog I can inform those who didn’t wade through 300+ pages of academic prose.

The key discussion is on pp. 99-102, and is not in other versions of the paper (because the change came at Henry’s request). Figure 5.1 summarizes the main point: there is open source that is not open innovation and open innovation that is not open source. The latter is trivial, because things like Windows and other licensed proprietary software are examples of external innovations licensed by PC makers that they don’t develop themselves.

Conversely, the folks at the Free Software Foundation or Project GNU are not interested in making money for companies, which is the whole point of Chesbrough’s book, paradigm and body of research. There are many examples of non-commercial OSS (or FOSS or FLOSS if you must), just as there are other forms of non-commercial online communities that don’t fit the open innovation model.

(I also wrote a 2007 paper drawing distinctions between open standards, open source and open innovation.)

So “open source” as a construct is not identical to “open innovation”, “online communities,” “open content,” or for that matter “free software.” (Some people treat “free software” as a proper subset of “open source” and some don’t, but no one treats them as synonymous.) The better researchers are using their terms more precisely, so that the research findings of multiple authors can be contrasted and integrated without creating needless confusion.

August 6, 2010

When titled this post, my co-author Marcel Bogers joked “that should have been a paper.” But of course “Dare to Care” is the theme of this year’s Academy of Management annual meeting being held in Montréal. But then all of us have probably used a goofy framing to fit an AOM conference theme (at least until we learned that it didn’t matter).

For the benefit of blog readers, I thought I’d mention the open innovation sessions that I’m planning on attending. This is of course is a personal list, and only reflects the opinions of the management of OpenInnovation.net because we are one and the same!

A keyword search of the program lists 19 main program sessions and 2 PDW that mention “open innovation” in any way shape or form.

One of these mentions open innovation in the title: “Open Innovation with Suppliers” at 4:45pm on Saturday. Two of the four panelists (Herr Doktor Frank Piller, Herr Doktor Joel West) would be considered recognized open innovation scholars. Our web page lists the draft schedule.

The goal of our PDW is to link open innovation with the prior literature on supplier/producers cooperation. IMHO open innovation should be doing more of this, creating bridges to established pools of literature that informs both sides.

Of the 19 sessions that mention open innovation in some capacity, the only other one that I’m sure I’ll attend is “Innovation Styles: Contrasts and Similarities” at 1:15pm on Tuesday. There we will be presenting new and improved version of our open/user/cumulative innovation research — continuing from our O/U/CI paper at OUI2009, my O/U/CI talk at the Center for Open Innovation last September, and presenting in more depth that I previewed in Göttingen in my talk on May 5. This is a conventional (PPT) paper presentation and we’re scheduled to be up first (i.e. 1:15-1:45).

My feelings won’t be hurt if OI scholars skip our session, the next to last of the conference. After all, there are three other sessions that mention “open innovation” being offered at the same time — one a paper session and the others a “division roundtable.” In fact, I won’t be attending a lot of OI sessions on Tuesday other than my own since I’m assigned to sessions during three of the first four slots. (During the 5th I’ll expect to be sharing a taxi with Christopher Lettl.)

A total of nine sessions Tuesday mention open innovation, and two of those (including mine) also mention user innovation. A third UI session features Jennifer Wooley and Tammy Madsen of Santa Clara doing a roundtable presentation on business user innovation, but I have to be in another room at the same time.

Given my Tuesday is so regimented, I haven’t made any firm plans for Monday but will play it by ear. There are 10 sessions to choose from, and three other sessions that are about user innovation. (Monday has one “cumulative innovation” session, while our O/U/CI talk Tuesday is the only other one in Montréal.)

Marcel has asked me to mention his own open innovation paper in a session entitled “Open Innovation and Learning” Monday at 4:45pm, but since I’m not on the paper I’m not going to give it a plug. However, I am tempted to hear Gary Dushnitsky present in the same session since I’ve been reading his entrepreneurship stuff for years but never met him.

For those who want to begin their Monday with O/U/CI, at 9:45am the session “Co-Creating Knowledge” will be a reunion of OUI2010 participants (and perhaps papers) in a division roundtable. The cast includes Pedro Oliveira/Eric von Hippel, Christian Lüthje/Alexandra Katharina Huener/Christoph Stockstrom of TUHH, and Johann Fueller of Innsbruck.

In offering recommendations, I feel a bit like my days as a movie reviewer — and probably about as many people will follow my recommendations. (At least then I got to see the show before offering a recommendation.)

August 4, 2010

#OUI2010 is over, and with it the annual gathering of user innovation, open innovation and a few cumulative innovation scholars.

In the final day, the conference host and founder Eric von Hippel announced that next year’s conference will be at Vienna University (WU.ac.at), hosted by Nik Franke and Christopher Lettl and their Institut für Entrepreneurship und Innovation. (Nik says that due to the WU academic calendar, it is likely to be July 2011). Eric disclaimed more than symbolic leadership:

This conference is not run by me, but has village elders like Nik Franke and Christopher Lettl.

We also ended the conference with a mug that proclaims “I Presented Brilliantly At 8th Annual International Workshop.” The most unusual thing was the reference to the “Open and User Innovation Society,” complete with a logo. On Monday, I asked co-organizer Mako Hill, who didn’t know much and didn’t know that there was never previously a “society”. On Wednesday, I meant to ask Eric or others about this seeming shift, but I didn’t get a chance.

This was an unusual conference for me, the first effort that I tried to tweet in realtime. With more than 120 two-minute talks (half of them ads for longer sessions, half the entire talk) it was impossible to post an update for each and every one. Still, I had people joke that “before I could figure out what the talk was about, you were already tweeting it.” (Maha Shaikh of LSE lagged on Monday, but on Tuesday and Wednesday nearly matched me tweet for tweet).

It remains mostly a user innovation conference. Looking at the 124 papers on the program:

There were 8 papers in the “open innovation” sessions and another 5 that mention “open innovation” in their title, a total of about 10%.

Only 2 papers about cumulative innovation — one explicitly (Peter Meyer’s latest paper on early airplanes) and one implicitly about cumulative innovation and user entrepreneurship (Yu Xin on mountain bikes).

Not enough on user entrepreneurship, with only 4 official papers. In addition, Emmanuelle Fauchart and Marc Gruber identified user entrepreneurs within all nascent entrepreneurs, although “Schumpeterians” have become “Darwinians” in the latest telling.

Lead Users were officially only 5 papers although many of the ideas were present in other papers.

Communities remain very important — officially 30 (one-fourth) of the total, although some “firms and users” papers were also related to communities.

One of those 12 open source presentations was mine — asking how what we know about creating successful (sponsored or autonomous) open source projects could be used to develop a viable open source community for primary and secondary education. I hope to post more later.

Overall, at the conference Eric used the conference to continue the mission he started with Democratizing Innovation, to change public policy (as well as public perceptions) to shift power away from producers towards users. Judging from the papers, not everyone shared this goal, which suggests that OUI has become a “big tent” that subsumes a wide range of research on distributed innovation.

At this point in my career, I strongly prefer focused workshops and small conferences to the zoos that the general conferences have become. I am grateful for the chance to participate in OUI for the past three years, and to be welcomed by the community as one of their own, despite being more of an OI person than a UI person (particularly on policy issues).

Photo by Marcel Bogers, during our post-OUI2010 meeting to work on our O/U/CI papers.

August 3, 2010

At #OUI2010, intra-organizational crowdsourcing has been one of the more interesting topics. (Of course, I am a producer of OSS and OI research of and a consumer of crowdsourcing work, so I am not as up-to-speed on the latter.)

The most ambitious was a paper by Hind Benbya and Marshall Van Alstyne (presented by the latter) about crowdsourcing can be used to create internal markets for knowledge, rather than the more hierarchical and bureaucratic approaches of more traditional knowledge management. As in external crowdsourcing, they use the two-sided market perspective (which Van Alstyne helped invent) to match buyers and sellers.

However, their new wrinkle is to argue that a price system — rather than internal fixed incentives or a rating system — is necessary to stimulate the right quantity and quality of idea generation. They spend a lot time trying to establish an appropriate price with its own currency that can be mapped onto a dollar price, and have a real system up and running that's being used already by a few banks.

Appropriately for a talk presented in the basement of MIT’s Sloan School of Management, the paper has been accepted by Sloan Management Review. It’s not yet finalized or on the SMR website, but the authors presented an earlier version at HICSS in 2008. (Update: last night they posted a new version to SSRN, and both authors emailed me asking me to link it.)

For external crowdsourcing, Karim Lakhani talked about his research with Kevin Boudreau on using TopCoder to crowdsource a solution for NASA to reduce the weight of medical kits for space shuttle astronauts. The company issued a press release last week about the success of the competition.

I previously argued (in June and Sept last year) that crowdsourcing better fits the user innovation paradigm or the open innovation paradigm. Now, I think crowdsourcing is more of a process or set of skills, enabled by an understanding of the two-sided market framework. (Are two-sided markets a phenomenon, a framework or a theory? It doesn’t seem like a new theory, but …)

In other words, crowdsourcing is really about systems and incentives, not any great new theory. The systems are the same sort of IT systems that have been refined over decades for online communities and collaborations. The incentives, as economists like Van Alstyne correctly note, are a matter of setting up efficient markets to self-regulate the supply and demand for ideas that are being sourced — and, as with all markets, the institutions to make the process run with transparency and efficiency.

August 2, 2010

I’m here this morning at the first day of 8th Annual International Open and User Innovation Workshop at MIT at Cambridge, Mass. We will be going until 1pm on Wednesday. After an introduction by Eric von Hippel, we have started the blitz of 2-minute capsule overviews of 25 long papers being presented today.

I counted 124 talks: 61 full papers (almost all with the 2 minute tease) and 63 "research updates” which only have the tease. One of the co-organizers, Mako (Benjamin Hill), said that 180+ attendees are registered.

Last year in Hamburg there were 31 full papers and 44 “in progress” submissions. As with the 2008 Harvard-MIT conference, the US workshops remain significantly larger than the European ones.

With this many papers, it’s going to be like drinking from a firehose, but as in previous years, I’ll try to highlight both trends and interesting snippets.

June 12, 2010

In working on our O/U/CI paper, one of the problems we’ve debated with is how much time to spend on the “I.” Clearly there is wide variation (some might say sloppiness) in the definition of innovation.

Last week, at the Tilburg Conference on Innovation, the Friday keynote speakers was Prof. Andrew van de Ven of the U. Minnesota. The choice was particularly apt, since van de Ven is on the scientific council of the Center for Innovation Research and because he spent the first five years of his life somewhere near here. (His family name goes back 18 generations at the Oshkot church less than 20km away from the conference site).

Most of all, he is known for the Minnesota Innovation Research Project, the multi-year, multi-disicplinary project that produced a series of papers and books, including The Innovation Journey. The study built on earlier innovation studies such as the work of Everett Rogers and Lou Tornatzky — crucial studies that are, alas, oft forgotten.

Prof. van de Ven offered three related definitions

change: an observed difference over time

invention: a new idea

innovation: the creation and implementation of a new idea

He suggested that “innovation” varies on eight different dimensions:

Time: duration, pace

Newness to observer and protgatonists

Recombination

Magnitude: radical vs. incremental

Complementarity

Unity of analysis: project, series of projects

Level of analysis: individual, organization or industry

Assessment: is the innovation good or bad? is it supported or opposed?

Prof. van de Ven called on researchers do define what they mean by innovation, to better allow comparability and integration of the various studies. Clearly this would also apply to studies of open innovation, user innovation and cumulative innovation.

I also had a chance to talk with Prof. van de Ven at dinner Friday night. One of his recent passions has been for research that is more integrated with the needs of our (nominal) clients in the real world. (Or, as he said Friday morning, “When theory meets reality, it’s a humbling experience”).

That passion was channeled into his recent book, Engaged Scholarship. The book so impressed us in the Entrepreneurship Division of the Academy of Management that we borrowed the phrase as part of our revised mission statement.